The key point
Two policies. Different interests.
A lender’s title policy protects the lender. An owner’s policy protects the insured owner’s interest, subject to its terms and exclusions. Having one does not mean you have both.
What does a title search do?
A search brings together relevant public-record information about a property. Examination of that history can identify matters such as recorded mortgages, liens or easements that need attention before a transaction can proceed.
A search and an insurance policy do different jobs. Ask the closing team which matters must be addressed before closing and which exceptions will appear in the proposed coverage.
Owner’s policy or lender’s policy?
- Owner’s title insurance
- Addresses covered claims against the owner’s interest, including certain claims connected to events before purchase. It is separate from the insurance that covers physical damage to a home.
- Lender’s title insurance
- Addresses covered title problems affecting the lender’s loan interest. Mortgage lenders commonly require it; it does not insure the buyer’s equity.
Source: CFPB: owner’s title insurance
CFPB: lender’s title insuranceRead the coverage, not just the name.
Policies contain exclusions and transaction-specific exceptions. Do not assume that every issue, boundary question or future change is insured. Ask for an explanation of the proposed policy, its insured amount and the matters it will not cover.
What needs to be resolved?
Ask which title requirements remain open and who is handling each one.
What is not covered?
Review both policy exclusions and transaction-specific exceptions, and ask how they affect this property.
What will I receive?
Confirm which policies are being issued and how the final documents will be delivered.
Include title coverage in your cost review.
Ask for an itemized explanation of title coverage and closing services. If you have a prior policy, tell your closing team and ask whether it affects the available quote. Use the calculator for planning, then confirm the transaction-specific figures with the team.
Source: CFPB: shopping for closing services
Understand closing costsGeneral educational information. Your transaction documents and the guidance of your closing team, lender and advisers determine what applies to your file.